Economy Gains 335,000 Jobs in Sign of Upturn

WASHINGTON — American business added an impressive 335,000 jobs last month as the overall unemployment rate stayed at 6.6%, the Labor Department reported Friday, providing strong evidence that the U.S. economy is finally emerging from its doldrums.

“The economy is on the move once again,” said Irwin Kellner, chief economist at Manufacturers Hanover Bank in New York. “We should see steady improvement throughout the year.”

The report came as particularly good news because many analysts had feared that the economy, sluggish for 2 1/2 years, would remain weak because of convulsions caused by the new tax law.

Four Months of Mending

Instead, the trend is in the opposite direction. With nearly 1.2 million new jobs created since October, the economy has now been on the mend for four months and unemployment has remained the same for three months.

Economists attributed the healthy job growth in part to signs of improvement in the trade outlook. After several years of steadily widening trade deficits, U.S. exports have been picking up in recent months as the decline in the dollar’s value has made American goods cheaper on international markets.

Business also appears to be rebuilding its inventories, after allowing them to shrink in the last year because of caution about the economic outlook.

“In manufacturing, employment has risen in four of the last five months, unmistakably indicating some sort of an upturn,” said Allen Sinai, chief economist at Shearson Lehman Bros. in New York.

Firms Shrug Off January

Indeed, according to Friday’s report, the nation’s beleaguered industrial firms seemed to shrug off a sharp drop in factory orders in January, which followed a big gain in December that was attributed to an effort to beat tax law changes that went into effect at the beginning of the year.

The number of hours worked at factories in February rose by an unusually large average of 0.3 hours to hit a two-decade high of 41.2 hours.

The Reagan Administration, which has been predicting that economic activity would pick up from last year’s meager 2.5% growth rate to 3.2% this year, cited the report as strong support for its forecast, which is more optimistic than most economists’.

The job surge is “good news and exceeds the expectations of most private forecasters,” said White House spokesman Marlin Fitzwater.

California Gets Most Gains

California, which accounts for about 12% of the nation’s population, was responsible for more than half the job gains last month. The state’s employment jumped 211,000 out of the total 370,000 additional jobs reported in the nationwide survey of households.

Because of a strong influx of people seeking employment, the jobless rate in the state remained at 6.2%.

Despite the sunnier economic outlook, the report pointed to a few possible clouds on the horizon. Almost half the gains for the month were in part-time jobs, for example, and 5.78 million people reported that they were working part time only because they could not find full-time jobs--a number 275,000 larger than in the previous month.

Meanwhile, in what may have been a statistical aberration, married men apparently lost about 190,000 jobs, while the total number of married women with jobs jumped 290,000.

‘A Good Picture’

“It’s a good picture any way you look at it,” said David Wyss, an economist at Data Resources Inc. in Lexington, Mass, “but there are still a number of holes.”

Overall, total jobs rose to 113.1 million, while the number of unemployed dipped below 8 million for only the second month in the last 5 1/2 years.

The civilian jobless rate, which does not include members of the armed forces in the United States, held steady at 6.7%. A record 61.2% of the civilian population 16 years and older was employed last month.

The good news for the economy was bad news for the bond market, where yields fell sharply as interest rates rose on fears that the Federal Reserve now has no reason to stimulate the economy through lower interest rates.

“This is probably the last nail in the coffin for the bond market bulls,” said Kellner.

Signals Higher Production

Economists stressed that gains in average hours on the job signal much larger jumps in February factory production and personal income than had been forecast.

“Just on the employment and hours data, you would say that industrial production rose a strong 1.5% last month,” said David Levine, chief economist at Sanford C. Bernstein & Co. in New York. “I think you should be more cautious and expect something like a 1% gain.”

Industrial production has been basically stagnant for more than a year, only recently registering modest back-to-back monthly gains of about 0.3%

Factory employment grew by 50,000 after a gain of only 3,000 in January, but much of the increase was because workers returned to their jobs after strikes in the machinery industry and at USX, the steel conglomerate.

Latinos Lead Statistics

Among various groups, Latinos appear to have gained the most from the expanding job market over the last year.

“Although they comprise only 7% of all U.S. workers, Hispanics accounted for 23% of the overall increase in employment,” Janet L. Norwood, commissioner of labor statistics, told a congressional committee.

The jobless rate for Latino workers fell sharply in February to 9.6%, suggesting that fears Latinos would be laid off in large numbers because of the new immigration law are not yet being born out. But it may also be evidence that legal Latino residents are benefiting at the expense of illegal immigrants, who often do not show up in the government statistics.

The unemployment rate for Latinos was roughly midway between the 14.3% unemployment rate for blacks and the 5.7% jobless rate for whites.